The onset of blockchain technology is possibly the most disruptive force in business today, even for the traditionally tech-averse art community. Among blockchain’s many proposed applications in art, one hotly debated use case—which some startups already offer—is the tokenization of artworks: Instead of trading a complete piece of artwork as common sense would suggest, blockchain now allows dealers to buy and sell tokens of an artwork, similarly to buying securities of a company.
Sure, the idea that art may no longer be traded in whole, physical pieces will scare away many classic art lovers, but art market insiders are actually quite excited about this prospect, such was the mood at Observer’s inaugural Business of Art conference in New York City on Tuesday.
“I think we can all agree that something we are all trying to do, tackle everyday, is to attract new buyers and educate people on why art is so special and how to engage in this market. If this can provide opportunities for emerging clients, especially those growing up in the digital age, I don’t see it as a problem,” said Anne Bracegirdle, an associate vice president at Christie’s, during a panel about how emerging data technology is changing the art industry.
“It’s some very smart people looking to take an illiquid market [art] and make it a little bit more liquid,” added Curt Bilby, CEO of Art Analysis and Research, a New York-based firm specializing in technical investigations of paintings.
Speaking about whether tokens could change the traditional perception of art ownership and therefore disrupt art valuation, Bilby said it would depend on the purpose of new buyers participating in this form of transaction. “The first question I’d ask is: Are they collectors or day traders?” he said. “I’d like to see the quarterly reports from these [token buyers] on how they can actually extrapolate value and how that value is going to appreciate.”
In the meantime, Elena Zavelev, founder of New Art Academy and art and tech event organizer, stressed that the model of dividing property ownership into shares is not new, but that blockchain provides a new tool to make it a reality for art.
That said, scaling tokenized art ownership faces two main challenges. “First, it’s legal issues—there are a lot of complications that have to be overcome,” Zavelev explained. “Secondly, art is a very emotional asset. No matter [whether] you are acquiring a tiny portion or a whole piece of Andy Warhol, you want to enjoy it somehow. With this type of ownership, it’s very hard to enjoy the artwork.”